The First Step to Buying a Home.
Don’t make a move until you’re pre-approved.
Spoiler alert! I could have turned this into a home-buying quiz, but the title gave away the first answer, didn’t it? There’s no reason to keep you in suspense because what’s important is why you should be pre-approved. By the time you finish reading this, I hope you’ll be reaching out to organize your financing because I know you can’t resist checking out properties online, too!
Pre-approval or pre-qualification?
They sound similar but they are not the same, and the difference can make or break your home purchase offer. A pre-qualification is a determination made by your loan originator of how much loan you can obtain, based on information you supply. It’s a good starting point if you have no idea what you can afford, but it’s not verified. A pre-approval is a written commitment from your lender stating you can obtain a mortgage for a certain amount. Naturally, if your loan originator is going to put that in writing, it’s going to be based on more than a conversation about how much you make and your best estimate of your bank balance.
A pre-approval requires analysis of your income, assets, and credit. It’s detailed, thorough, and accurate. The good news is it doesn’t take weeks to prepare! You supply information via our secure online loan application (you can complete it from home in your pajamas), we follow up with any questions, analyze the data, and issue a written pre-approval. The more quickly you complete your application, the faster we can give you the result. And if you’ve been following the real estate market, you know there’s a need for speed when you make an offer on a home.
Your agent wants a pre-approval. Sellers do, too.
When you talk to a real estate agent – and I hope you do – one of the first things they’ll ask is do you have a lender and are you pre-approved. Unless you have a mountain of money ready to spend on a house, a home loan is a necessity. Agents need to know you are ready to buy. Many agents won’t work with you unless you’re pre-approved. They know what goes into a successful offer, and proof of financing is very important. Remember, when you see your perfect home, you’re probably in a race with many other buyers. You need to make the strongest bid possible. Waiting to be pre-approved until after you find the house means you’ve lost the race before you’ve left the starting gate.
Take a moment to consider the seller’s point of view. You’re considering multiple competing offers. You want the best price, an offer without contingencies, and cash would be nice, but more than likely you’re looking at offers with financing. When you weigh identical offers, one with a pre-approval and one without, there’s no contest. Pre-approved has the edge.
Give yourself every advantage.
One last consideration. If you don’t have a pre-approval, you won’t know your price range. It’s very disappointing to set your sights on a house and find it’s out of reach. It may not be as much fun as looking for your dream dwelling online, but a pre-approval is your ticket home!
